Perpetual Energy reduces debt
On November 28,2014 Perpetual Energy announced that it was making an early partial redemption of it's 7% unsecured convertible debentures.It was redeeming $25 million of the $60 million issue.It will also redeem the remainder before maturity.The debenture matures in December31,2015.Perpetual also announced that it intends that 2015 capital spending will be funded from 2015 cash flow.In that regard,it expects to have more asset sales in 2015.Earlier ,on October 27,2014 it announced that it had sold several non-core properties in central Alberta for $22 million.This was also to reduce debt and strengthen their balance sheet.
The Mannville area
Perpetual Energy (PMT) has sold off Mannville properties before.This time it sold 870Mboe of heavy oil reserves and 4026 net acres of heavy oil rights.Expected production for Q4 from these properties was 400 to 415 boe /day. Perpetual now has an undrawn credit facility of $100 million which can be used to develop their Mannville properties.It says that it is ready to do waterflooding in the Mannville and Wilrich area (natural gas liquids).But does PMT really intend to bring their Mannville properties into production?Perpetual does not have much infrastructure in this area and SAGD plants are expensive to bring on and to maintain.
PMT has spent a lot of money in the West and East Edson areas to develop processing plants and connections with the Alliance pipeline.Even more will be required.This blog expects that natural gas production from their Edson properties will increase and even natural gas liquids;but slow development of their heavy oil production especially in the present price environment.Investors can expect more asset sales from Mannville and only partial development although it is clear that PMT has oil pools here.Also expect PMT to spend more capital on developing their shut-in gas wells as natural gas looks more attractive.
The Future
Perpetual Energy is one of the most well-managed resource stocks in the oil patch.It does not spend lots of money on exploratory wells that become dry wells.It spends on areas where it has adequate history and has a pretty good success rate.The East Edson is one good example of their drilling success.It also does not take on excessive debt when the price of oil is so volatile.Their natural gas production has increased but only slowly.Now production is about 100MMcf/day.And they refuse to spend too much on shut-in wells that may return too little.They also have bought a property in the Duvernay that they have started drilling on but do not have results back yet.
This blog expects little new heavy oil production from Mannville but maybe a few more asset sales in 2015.Also it expects that PMT is about due to make another natural gas or natural gas liquids discovery in the broader Edson area where they have been successful already.It is also possible that their Duvernay property will be a winner in late 2015.PMT is well managed and has little downside and could be an upside winner with it's record of successful drilling on fairly well known acreage.
The Mannville area
Perpetual Energy (PMT) has sold off Mannville properties before.This time it sold 870Mboe of heavy oil reserves and 4026 net acres of heavy oil rights.Expected production for Q4 from these properties was 400 to 415 boe /day. Perpetual now has an undrawn credit facility of $100 million which can be used to develop their Mannville properties.It says that it is ready to do waterflooding in the Mannville and Wilrich area (natural gas liquids).But does PMT really intend to bring their Mannville properties into production?Perpetual does not have much infrastructure in this area and SAGD plants are expensive to bring on and to maintain.
PMT has spent a lot of money in the West and East Edson areas to develop processing plants and connections with the Alliance pipeline.Even more will be required.This blog expects that natural gas production from their Edson properties will increase and even natural gas liquids;but slow development of their heavy oil production especially in the present price environment.Investors can expect more asset sales from Mannville and only partial development although it is clear that PMT has oil pools here.Also expect PMT to spend more capital on developing their shut-in gas wells as natural gas looks more attractive.
The Future
Perpetual Energy is one of the most well-managed resource stocks in the oil patch.It does not spend lots of money on exploratory wells that become dry wells.It spends on areas where it has adequate history and has a pretty good success rate.The East Edson is one good example of their drilling success.It also does not take on excessive debt when the price of oil is so volatile.Their natural gas production has increased but only slowly.Now production is about 100MMcf/day.And they refuse to spend too much on shut-in wells that may return too little.They also have bought a property in the Duvernay that they have started drilling on but do not have results back yet.
This blog expects little new heavy oil production from Mannville but maybe a few more asset sales in 2015.Also it expects that PMT is about due to make another natural gas or natural gas liquids discovery in the broader Edson area where they have been successful already.It is also possible that their Duvernay property will be a winner in late 2015.PMT is well managed and has little downside and could be an upside winner with it's record of successful drilling on fairly well known acreage.
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